| Liabilities | Amount ( Rs.) | Assets | Amount ( Rs.) |
| Creditors | 42,000 | Land and Building | 1,24,000 |
| Investment Fluctuation Fund | 20,000 | Motor Vans | 40,000 |
| Profit and Loss Account | 80,000 | Investments | 38,000 |
| Capital A/c : | Machinery | 24,000 | |
| J – 1,00,000 | Stock | 30,000 | |
| H – 80,000 | Debtors – 80,000 | ||
| K – 40,000 | 2,20,000 | Less: Provision – (6,000) | 74,000 |
| Cash | 32,000 | ||
| 3,62,000 | 3,62,000 |
On the above date, H retired and J and K agreed to continue the business on the following terms :
(i) Goodwill of the firm was valued at Rs. 1,02,000.
(ii) There was a claim of Rs. 8,000 for workmen’s compensation.
(iii) Provision for bad debts was to be reduced by Rs. 2,000.
(iv) H will be paid Rs. 14,000 in cash and balance will be transferred in his Loan Account which will be paid in four equal yearly instalments together with interest @ 10% p.a.
(v) The new profit-sharing ratio between J and K will be 3 : 2 and their capitals will be in their new profit-sharing ratio. The capital adjustments will be done by opening Current Accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.
SOLUTION
